BUSI 690 Rothaermel Exercise 3

Why is it important for organizations to have alignment between its strategy and organization structure?

A business strategy is a practical plan for a company to further its mission and objectives to success, while organizational structure is a formal layout of a firm’s hierarchy. Both structure and strategy are a crucial component of achieving business success. For effective performance of the various process and systems, a company needs to align their business strategy with their structure at the various levels of production.

Aligning organizational strategy to its structure focuses energy, eliminates conflicting work and redundancy, and defines the competencies and capabilities providing a competitive advantage to the company (Rothaermel, 2013). Alignment improves the payback of project and initiative activities by focusing resources on activities of the business with the greatest positive impact. It clarifies participation and strategy as well as the collaboration of stakeholders promoting the formalization of strategic plans and the subsequent elucidation into divisional tactical plans. Consequently, it facilitates the shortening of the realization of strategic plans by identifying barriers, minimizing redundant project activity, and preventing outcome conflicts. Alignment ties company’s culture, capabilities, competencies, resources, and processes collectively to implement the organizational strategy. A company can reduce the cost by avoiding projects that do not reflect their strategy. It enables the company to minimize the time used in change program life cycle by coordinating all the project’s components and eliminating inconsistency and redundancy. In addition, alignment provides constancy and the clarity of purpose from top to the lower operating levels and provides flexibility to enhance quick organizational strategy change. It supports market maneuverability in response to increased competition. Alignment makes strategy real and practical, going beyond slogan and historically unified plans.

Review the product scope of the firm. What commonalities across the products would likely be enhanced by flexible cross-functional teams?

The Gore Company commits to keeping its operations and teams small and informal. It does not, for instance, allow a facility or team to have more than 200 people. This reflects one of the company’s basic believe that once a team grows into big numbers it is likely to mobilize its plants into clusters less productive, innovative, and efficient. However, the company is likely to maximize opportunities more through cross-functional collaboration across certain processes and products, for example, they could have the R&D specialists, salespeople, engineers, machinists, and chemists work in the same plant (Gore, n.d).

What would be your expectations of the type of norms found at W.L. Gore?

The informal structure at Gore, with no formal titles, positions, and communication structures is one that seems less organized and disorderly from a distance. Most people are used to formal structures and such an arrangement would seem more of a social gathering where some workers are likely to swim with the crowds without substantial returns for the company. However, a closer look at the success of the company presents a totally different situation, one of united, motivated, satisfied employees working towards common goals through a commonly accepted and internalized system of values.

How can a firm lower the chances that key managers will pursue their own self-interest at the expense of the stockholders? At the expense of the employees?

One way companies can minimize the chances of managers pursuing their own self-interest at the expense of stockholders is by developing and adopting conflict of interest policies. A  Conflict of interests is a combination of circumstances that creates a risk that professional action or judgment regarding an issue of primacy is likely to be unduly affected by a secondary interest. The main objective of conflict of interest policies is to ensure that employees focus to their primary and secondary area of interest. Managers should also be in a position to adhere to organizational ethics and values to guide their role as custodians of authority and leadership. Company business ethics forms an important guide for decision and organizational behavior.

Why are the two roles, CEO and chair of the board of directors, typically separated? Is it a positive development for so many firms to have combined CEO and board chair?

One of the basic roles of the board is monitoring the operations of the firm to ensure it is in line with the mandate of the company. The role of the CEO, on the other hand, acts as the driving force for these operations. When the company’s board chair is also the CEO implies that they will be monitoring themselves opening the room for abuse of the position. It also implies that the businesses’ entire decision making falls under one person, minimizing chances for checks and balances. The CEO holds absolute authority and in such a cease it becomes extremely difficult for the board to evaluate objectively and monitor his decisions and performance.

Governance activists advocate that American public companies divide the CEO and chairman roles as a result of the near-collapse of the financial system. The argument is that the financial collapse is on the failure of boards and executives to protect the long-term profitability and health of their businesses, as well as the interests of the shareholders (Rothaermel, 2013). A non-executive chairman, in this regard, helps to promote the oversight of management and to more closely align the shareholders with the board. An independent chairman is in a position to ensure full engagement of the board and the strategy and to evaluate the implementation.

References

Gore W. L. & Associates (n.d). Retrieved from: www.gore.com

Rothaermel, F. T. (2013). Strategic Management Concepts and Cases (Custom Package). New York, NY: McGraw-Hill. ISBN: 9780073535166.

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